Even three years after the rapid rise of generative artificial intelligence, most AI startups are still earning their revenue from businesses rather than everyday consumers. While tools like ChatGPT were quickly adopted by the public, many consumer-focused AI apps designed for specific uses have struggled to gain long-term interest and widespread use.
Speaking at TechCrunch’s StrictlyVC event in December, Chi-Hua Chien, co-founder of Goodwater Capital, said many early consumer AI products lost relevance as bigger, more powerful AI models emerged. He explained that some AI tools for video, audio, and photos were exciting at first, but became less valuable once advanced models were released or made freely available. He compared this to early smartphone apps, like flashlight apps, which were popular at first but later became built-in phone features.
Chien noted that consumer AI is still in a “settling” phase, similar to the early years of smartphones before major apps like Uber and Airbnb appeared. He believes AI platforms need time to stabilize before truly impactful consumer products can emerge. Elizabeth Weil, a partner at Scribble Ventures, shared this view, describing today’s consumer AI space as an awkward middle stage that has not yet reached maturity.
Both investors suggested that future breakthroughs in consumer AI may depend on new types of devices beyond smartphones. While companies are experimenting with smart glasses, wearable devices, and even screenless gadgets, not all AI products will require new hardware. Ideas such as personal AI financial advisers or always-on digital tutors could still thrive on smartphones. However, they expressed doubts about AI-driven social networks, warning that replacing human interaction with AI bots could take away what makes social platforms meaningful to users.